COURT OF APPEAL SANCTIONS HEARING: 70 KEY POINTS OF THE JUDGMENT
The 70 key points of the Court of Appeal judgment in Denton -v- White  EWCA Civ 906.
“We hope that what follows will avoid the need in future to resort to the earlier authorities.” (Paragraph 24).
CRITICISM OF MITCHELL
1. The “triviality test” has led to an exceptionality test. This test was rejected in the Jackson report and does not form part of CPR 3.9.
2. Such a test is too narrow.
3. The Mitchell approach downplays the importance of considering “all the circumstances of the case.
4. Disproportionate penalties have been applied for breaches which have little practical effect on the course of the litigation. This leads to a party suing its own solicitors and adds to the costs of litigation due to increases in insurance premiums.
5. The consequences of this unduly strict approach has been to encourage:
(i) Uncooperative behaviour by litigants.
(ii)Excessive and unreasonable satellite litigation.
(iii) Inconsistent approaches by the Courts.
6. CPR 3.9 has three elements (not to be confused with the three stage test the Court of Appeal applied).
7. The first element is that it applies when any sanction is imposed. The first task of the court is to identify the “failure” in the first place.
8. The second element is that “the court will consider all the circumstances of the case, so as to enable it to deal justly with the application.”
9. The third element is that the exercise directed by the second element shall include a factor of considerations (a) and (b). The need
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
MITCHELL: “SUBSTANTIALLY SOUND” BUT CLEARER GUIDANCE NEEDED
10. The guidance given at paragraphs 40 and 41 of Mitchell are “substantially sound”. However the way it has been interpreted means that the approach should be restated in a little more detail.
THE THREE STAGE TEST
11. A judge should approach an application for relief from sanctions in three stages.
12. The first is to identify and assess the seriousness of the failure to comply. If the breach is not significant the court need not spend too much time on the second and third stages.
13. The second stage is to consider why the default occurred.
14. The third stage is to evaluate “all the circumstances of the case” so as to enable the court to deal with the matter justly, including factors (a) and (b).
THE FIRST STAGE
15. The first step is to identify the seriousness of the failure. Can the breach be described as trivial.
16. Triviality is not part of the test described in the rule. It is a useful test in the first stage.
17. However the focus at the first stage should not be on whether the whether the breach has been “trivial” it should be on whether the breach is “serious or significant”
18. In evaluating a breach judges should evaluate its “seriousness and significance”. The concepts are not hard edged but, over time, there should be some judicial consistency.
19. The assessment of seriousness or significance of the breach should not, initially at least, involve a consideration of other unrelated failures that have occurred in the past.
20. At the first stage the court should concentrate on an assessment of the seriousness and significance of the very breach for which relief from sanctions is sought.
21. Any consideration of earlier breaches is best done at the third stage rather than as part of the assessment of seriousness or significance of the breach.
22. If a judge concludes that a breach is not serious or significant, then relief from sanctions will usually be granted and it will be unnecessary to spend much time on the second or third stages.
23. If the court decides that the breach is serious or significant then the second and third stages assume greater importance.
THE SECOND STAGE
24. The second stage cannot be derived from CPR 3.9 but from Mitchell. The court will need to consider why the failure to comply occurred.
25. There is no encyclopaedia of good or bad reasons, Mitchell gives examples, these are no more than examples.
THE THIRD STAGE
26. The major misunderstanding of Mitchell was the assumption that if the breach was not trivial and there was no good reason then an application for relief would automatically fail. That is not the case and is not what the court said in Mitchell.
27. CPR 3.9 requires that, in every case, the court will “consider all the circumstances of the case, so as to enable it to deal justly with the application.” This is the third stage.
28. The phrase “paramount importance” in Mitchell had encouraged the view that factors other than factors (a) and (b) are of little weight. What the court said was that other factors should be given less weight than the two considerations specifically mentioned in the rule.
29. This had given rise to some confusion which the Court of Appeal sought to remove. Factors (a) and (b) are of particular importance.
30. Factor (a) makes it clear that the court must consider the effect of the breach in every case.
31. If the breach has prevented the conduct of the case efficiently and at proportionate costs this will be a factor weighing in favour or refusing relief.
32. Factor (b) emphasises the importance of complying with the rules. The court must always bear this in mind, the old culture of non-compliance is no longer tolerated.
33. The court must give particular weight to these two particular factors.
34. The more serious and significant the breach the less likely it is that relief will be granted unless there is a good reason for it.
35. Where there is a a good reason for a serious or significant breach relief is likely to be granted.
36. Where the breach is not serious or significant, relief is also likely to be granted.
37. It is always necessary to have regard to all the circumstances of the case.
38. The factors that are relevant will vary from case to case.
39. The promptness of the application will be a relevant circumstance to be weighed in the balance.
40. Past or current breaches of the rules and orders may also be taken into account as relevant circumstances.
UNREASONABLE APPROACH ADOPTED BY SOME JUDGES
41. The court was concerned that some judges are adopting an unreasonable approach to CPR 3.9.
42. The 18th Implementation Lecture stressed “it has changed not by transforming rules and rule compliance into trip wires. Nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice. If that were the case then we would have, quite impermissibly rendered compliance an end in itself and one superior to doing justice in any case.”
43. Some judges were approaching applications for relief on the basis that relief should be refused unless the breach was trivial or there was a good reason for it. This was leading to decisions that were manifestly unjust and disproportionate.
44. This approach was not correct and was not mandated by what the court said in Mitchell.
44. A more nuanced approach is required however the two factors set out in the rule must always be given particular weight.
SATELLITE LITIGATION AND NON-COOPERATION
45. The satellite litigation that had caused concern has been caused by a failure to apply Mitchell correctly.
46. Litigation cannot be conducted efficiently without (a) fostering a culture of compliance and (b) cooperation between the parties and their lawyers.
47. This applies as much to litigation between litigants in person as it does to others.
48. It should not be overlooked that CPR 1.3 provides that the parties are required to help the court to further the overriding objective.
49. Parties who opportunistically and unreasonably oppose applications for relief from sanctions take up court time and act in breach of this obligation.
50. It is wholly inappropriate for litigants to take advantages of mistakes by opponents in the hope that relief from sanctions will be denied and they will obtain a windfall or other litigation advantage.
51. In cases where it can be seen that the breach is neither serious nor significant; a good reason is demonstrated; it is otherwise obvious that relief from sanction is appropriate, parties should agree that relief from sanctions be granted without the need for further costs to be expended in satellite litigation.
52. The parties should, in any event, be ready to agree limited to reasonable extensions of time up to 28 days as envisaged by the new rule 3.8(4).
APPLICATIONS FOR RELIEF FROM SANCTION SHOULD BE THE EXCEPTION RATHER THAN THE RULE
53. It should be an exceptional case where a contested application for relief from sanctions is necessary.
54. The first reason for this is that compliance should become the norm.
55. The second reason is that the parties should work together to make sure that in all but the most serious cases, satellite litigation is avoided even where a breach has occurred .